Europeans Stay Rooted, Despite Economy

In the U.S., almost 30% of citizens live outside the state they were born in. In the European Union, the figure for the 27 member states is barely over 3%, even though the bloc allows its citizens to move across borders freely.

The lack of mobility within the EU—and within the 17-country euro zone—is one of the main reasons why Europe has struggled to pull itself out of its economic misery. Countries like Spain and Greece are in the deepest morass of the crisis, with one in four workers looking for a job; in Germany and Austria, companies are swimming in a sea of cheap credit and complain that they can't find enough skilled workers as unemployment hovers around 5%.

German Chancellor Angela Merkel and others have picked up on this discrepancy. Young, unemployed Spaniards should apply for jobs in booming Bavaria, Ms. Merkel has said. For the German chancellor, increased labor mobility is a better answer to the vast imbalances within the euro zone than fiscal transfers from rich countries to poor ones.

But so far, there is little evidence that economic problems are pushing many EU citizens to move.

"The crisis impact is very interesting," says Laszlo Andor, the EU's employment commissioner. "On the one hand, it has created a much greater need for mobility in the EU. On the other hand, it has resulted in a fall of the number of people who went from one country to another to work."

As migrant workers pulled out of Spain or Ireland, the number of EU citizens living in Germany, Austria or Finland, but born elsewhere, went up marginally but not enough to compensate for the overall decline. Yet even those tiny increases, between 0.1 and 0.2 percentage point from 2009 to 2011, have created a backlash in some countries.

The crisis "very clearly raised some unease, animosity, sometimes even xenophobia against people who come from another country," says Mr. Andor.

This week was a good moment to witness this trend. It started out with Germany, the U.K, the Netherlands and Austria asking for more power to keep out people they claim are trying to take advantage of their welfare systems.

Then on Wednesday, Switzerland, not a member of the EU but part of its passport-free travel zone, invoked a special safeguard clause that allows it to cap the number of workers from 28 European countries.

None of these moves are likely to make EU citizens feel more welcome in a foreign country.

But there are other obstacles to moving to another EU country to work. The biggest barrier is of course language, and Mr. Andor says that countries like Spain and Italy were too slow to teach young people languages like German that could help them find jobs.

It doesn't stop here, though. Many states still don't recognize professional qualifications earned abroad, and social security and tax systems remain national and complicated to understand, especially in a foreign language, says Alex Lazarowicz of the European Policy Centre, a Brussels-based think tank.

EU citizens can receive their unemployment benefits in another country for three to six months, but few people know about or use this system. In any case, Greek jobless payouts will hardly keep you afloat in an expensive city like Munich.

On Friday, Mr. Andor will present measures to improve labor mobility in the EU. But as he concedes, these are mostly about better implementation of existing rules, for instance by getting countries to set up agencies to inform migrant workers about their rights.

That is a long way off ambitious plans that the commission touted last fall, when it sketched out ideas for a relaunch of its monetary union.

Among them: euro-zone-wide unemployment insurance to supplement national benefits when economic shocks hit some countries harder than others. That could take pressure off national budgets and, by boosting overall payouts, make it easier to move countries in search for a job.

While it garnered support from the French, the central unemployment insurance was quickly knocked down by Germany, which saw it as a fiscal transfer through the back door. Since then, the public debate has gone quiet around this idea, partly because promises by the European Central Bank to buy government bonds have taken some of the urgency out of initiatives to overhaul the euro zone.

And even though unemployment in the euro zone is now higher than ever, again the divergences between rich and poor states are taking their toll.

"People don't look at the average level of the unemployment. But they look at their local environment," says Mr. Andor. "And someone in Bavaria…or someone in Finland will have a much lower level of emergency."

Despite these setbacks, Mr. Andor, one of the EU's most outspoken, if not most powerful, commissioners, still believes that a euro-zone unemployment fund will one day become a reality. "The steps that are necessary in order to stabilize the situation do not happen because people dream about them, but because at the end of the day people understand that there is simply no alternative," he says.

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